Apple's Big Missed Opportunity?

This week, the buzz about Apple's new release of iTunes 9 began. One headline read, "more iTunes 9 details, Apple Developing Social networking application?" The timing is impeccable following the departure of Google's Eric Schmidt from the Apple board on August 3rd due to the continued "conflict of interest" between the two companies. It is becoming more and more clear that the future of Apple and Google will be building castles in the same sandbox. Google is moving more aggressively into Apple's core OS and browser business, and Apple wants to dominate application platforms for mobile. With a move into social networking, they add Facebook to their list of direct rivals.

The story made me think of Apple's biggest missed opportunity in the last few years. It involves an innovation to an existing product that could have made them a leader in the social networking space, and put them in a unique position for greater domination of Google, Facebook and others.

I'm speaking about Apple's Address Book. Consider the fact that Apple sold 2.6 million computers and 5.2 million iPhones in the second quarter of 2009, all loaded with Address book as the main application to store user's contacts and allow for remote syncing between various devices. Address Book uses the standard VCF format and has been included as a standard app since Apple launched its OS 2002 and tens of millions of users around the world are currently managing their contacts through the application.

As it stands, Facebook is mostly a dynamic address book. It does the functional things people need an address book to do: storing essential information about people and managing communication with your network including direct messages, event invitations, birthday wishes, pokes, games and more. Active user updates assure the information is correct and messages reach the user while social components increase engagement. But I don't use Facebook for any considerable messaging because their delivery system is inferior. You can't easily drag and drop contacts, or create sub-lists that are for specific events or categories or handle multiple email accounts, easily export your contacts to lists etc.

By looking at Apple Address Book's production summary we see something quite similar: "Address Book provides a flexible and convenient way to store contact information for family, friends, and colleagues online" but in a point of differentiation, it "is integrated with Mail, iChat, and other applications, allowing you to enter contact information once and have instant access to it from multiple applications."

So basically, the essential and popular functions of Facebook, which include organizing and finding your friends and new contacts, communicating with groups, tracking and organizing lists of friends for events, birthdays and beyond could be done by an app that is based on your desktop, integrated with all your other devices and connects to standard communication tools. Add an intelligent and simple online interface (think Twitter) and you have everything you need for communication, CRM and social.

It is entirely likely that Apple has been thinking of this for years. A move into social media would be a significant undertaking and was likely not a priority in relation to Apples core products. Yet their biggest product win in the past decade, the iPhone, is intrinsically tied to making communication easier. With the launch of MobileMe I couldn't help but shake my head in disbelief. It was a weak attempt at bringing online functionality and improved sync to Address Book, but instead of creating a social communication tool that could have easily been Twitter years before the microblog service, they chose to concentrate on sync. If the name of the game is owning the conversations, a next generation Social CRM system would dominate that market.

I have watched companies like Plaxo, Salesforce, 37Signals HiRise and Facebook enter the space of Social CRM and used many of them, all the while I still keep uploading my contacts to the Apple Address Book. If Apple had entered this market more aggressively they would be bringing their innovation and ingenuity to a market where the biggest player, Salesforce.com, is completely bereft of any design aesthetic or UI expertise. 37Signals saw a gap in this market and all they did was create a slightly more sophisticated web based Address Book. They are currently managing over 8 million contacts.

Apple has sold over 30 million iPhones. Exponentially how many contacts are in the Address Books of those phones? At a company who has become a market leader bringing ground-breaking products to market with utility and design in mind, this seems like a lay-up. Google Wave has certainly stolen some thunder from this potential and with their amazing team has a chance to redefine what online communication and contact management will mean, but Apple has the iPhone market, and the built in Address Book contact management that comes with its continued growth.

I want to open my Address Book either online or my desktop and be able to speak directly to people, see their ambient activity, easily send them birthday messages, create small lists that I can invite to events and comment on their status....and I want it integrated with a superior communications toolset, synced with Mail, iChat and my iPhone with a simple web based UI that allows for conversation.

Apple is no longer just a hardware company. They created a killer OS, they have pushed into the Office suite with iWork, nudged at Adobe with Aperture and Final Cut and are deeply entrenched in the browser wars. Now with iWork.com, Apple has moved into the online document editing and management space that has been a key product area for Google. They know how to build great web-enabled software. They know the connection between the desktop and the internet. They know how to build community. So why not make Address Book the best Social CRM tool ever? From a branding perspective the name Address Book is as ideal in its functionality and established connection to Apple.

So did they miss their chance to create the first active social network that syncs with all your devices and has the ability to facilitate connections between millions of like-minded individuals with a simple expansion of their embedded software products. I don't think its too late. Lets see if Apple thinks the same.